Retama strikes deal with Vegas company

By Patrick Danner :
April 26, 2012
: Updated: April 27, 2012 12:33am

Las Vegas casino company Pinnacle Entertainment Inc. on Thursday announced it has agreed to pay $22.8 million to acquire a 75.5 percent equity stake in the partnership that owns Retama Park’s racing license.

Photo By Kin Man Hui/San Antonio Express-News

Retama Entertainment Group CEO Bryan Brown takes questions from the media about the acquisition of Retama Park by Pinnacle Entertainment on Thursday, Apr. 26, 2012.

Las Vegas casino company Pinnacle Entertainment Inc. on Thursday announced it has agreed to pay $22.8 million to acquire a 75.5 percent equity stake in the partnership that owns the money-losing horse track's racing license. Pinnacle will provide immediate funding, averting a possible bankruptcy for the track's owner.

It was the Selma facility's development potential that enticed Pinnacle, President and CEO Anthony Sanfilippo said.

Sanfilippo envisions a mixed-use development to complement the track facilities. Such a project could include an entertainment center with theaters, restaurants and a bowling alley, he said, though specific details still are being discussed.

Whether a casino will be part of those plans remains to be seen. Gaming currently isn't legal in Texas, and previous efforts to legalize it have failed.

“We aren't gambling that the reason we're doing this is that there could be casinos here,” Sanfilippo said. “We think there (are) opportunities here whether or not there's casino gaming here.”

Todd Eilers, a securities analyst who follows the gaming industry, views the deal as a “defensive move” for Pinnacle. It has three Louisiana casinos that draw Texas gamblers, so those properties could be hurt if Texas ever adds gaming.

“This should help soften the blow” if Texas gets gaming, said Eilers, a senior research analyst with Roth Capital Partners LLC in Newport Beach, Calif. He added, “I doubt (Pinnacle) would be lobbying all that hard for casinos in the state.”

State lawmakers would have to be persuaded to let voters decide whether to allow gaming at Texas racetracks or elsewhere.

Track officials previously have said they wanted to bring in a financial partner to fund the track's losses while they pushed for legalized gaming at state racetracks.

Retama Park CEO Bryan Brown on Thursday said he doesn't believe a casino component is “hugely important” to Pinnacle, at least right now.

“In the near term, they really want to focus on the development opportunities here,” Brown said.

Brown added he's certain the track can become profitable even if slots or other casino games aren't part of the future.

“We've got so much infrastructure that's already available,” he said. “With some tweaks and some adding (of) some of these components that we'll look into, it really could be” profitable.

Retama Park opened in 1995 and has never made money. The track's owner, Retama Development Corp., a municipal subdivision of Selma, filed for bankruptcy in 1996. It emerged from bankruptcy a year later, shedding some of its debt.

The RDC recently teetered on the brink of bankruptcy before striking the deal with Pinnacle, which immediately agreed to loan the RDC $2.6 million.

The price Pinnacle will pay for a majority stake in the partnership that owns the racing license is comprised of $15 million in cash and $7.8 million in debt securities and other interests. The cash portion will be used primarily to refinance the RDC's debt.

Retama's racing license has been owned by Retama Partners Ltd., a partnership involving numerous individuals and trusts. According to a list compiled last year, the partners included Spurs majority owner Peter Holt, car dealer Marsha Shields of McCombs Enterprises, and Drake Leddy, a developer and the partnership's chairman. A trust affiliated with Joseph Straus Jr., the father of Joe Straus, speaker of the Texas House, also held an interest.

“Horse racing will always be the core of this facility,” Sanfilippo said. “We don't want this to be a one-dimensional site. We want it to have many forms of entertainment with thoroughbred racing being at the center of it.”

Besides Louisiana, Pinnacle owns casinos in Missouri and Indiana and it owns the River Downs racetrack in the Cincinnati area. It also owns 26 percent of a company that is developing five resorts in Vietnam, Sanfilippo said. Pinnacle employs about 8,000 people.